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Econet to Relaunch Ecolife(AllAfrica Via Acquire Media NewsEdge) Econet Wireless will reintroduce its mobile phone-based insurance service EcoLife, scrapped two years back after a contractual dispute with the service's software providers, to counter competition from fellow fierce industry player, Telecel. Telecel launched its mobile insurance, telecare, last month in partnership with Zimnat. "We have innovation in our DNA and we are going to be launching the new EcoLife and we believe that is key to separate us from competition," chief executive Mr Douglas Mboweni told analysts during presentation of the group's results for the half year to August 2014. Mr Mboweni said Steward Bank was playing a critical role in feeding growth of the group's overlay services. "When you look at the trend, the voice market has been saturated but we still believe that as long as some individuals are not yet connected we have to put up that infrastructure to connect them and make sure that the value proposition around that subscriber is maintained. Econet terminated EcoLife in 2012 after almost a year, claiming that Namibian software provider Trust Co had started demanding a higher fee for each EcoLife customer, contrary to their agreement, sparking a dispute that eventually resulted in the cancellation of the contract. Before termination, an estimated 1,2 million customers had subscribed to the service. At the time, Econet said it did not owe anybody money as it was offering life cover for free to its customers. However, this is despite the fact that customers had to use a prescribed amount of airtime in order to qualify, meaning one was compelled to buy a fixed amount of airtime, they may not have wanted, to qualify. Early this year, an arbitrator dismissed a claim by Trust Co that it was owed $6,9 million by Econet Wireless and instead ordered that the Namibian firm pay the latter $455 500. The ruling by the arbitrator, a South African lawyer, was the last chapter in the battle between Econet and Trust Co, which Econet had won at the Supreme Court of Zimbabwe. EcoLife allowed Econet's subscribers to get free life cover on minimum airtime of only $3 per month and the amount of cover was directly proportional to the amount of airtime used. Econet said its strategy to steer the business towards value added services is beginning to bear fruit, as its overlay services showed strong growth in the half year to August 2013. Non-voice services - products such as EcoCash, data services and others - now contribute 21 percent to Econet's revenues, up from below 10 percent in the same period last year. Cumulatively, the contribution of these products to Econet's revenue has grown by 96 percent since the company began implementing the strategy. With Zimbabwe's mobile penetration rate now above 100 percent, voice revenues are evidently beginning to taper off. Last year, Econet announced a new thrust in strategy, where the business would focus more on growing overlay services to drive revenue and margin improvements into the future. The latest financial results show that the strategy is working. "We had anticipated the trend away from traditional income streams. We then took a strategic decision to steer the business towards innovations that would become new sources of growth for our business. We are beginning to see the fruits of that strategy," Mr Mboweni said. He, however, added that voice services would remain a critical service offering and would continue to receive the appropriate attention. Reflecting the growth in non-traditional income streams, the number of EcoCash subscribers has grown to 3,7 million from 3 million in August last year. The number of agents has more than doubled, rising from 7 000 last year to over 15 000. The number of broadband subscribers shot up from 3,6 million in August last year to 4,7 million this year. "Our strategic focus is on ensuring we add value to those platforms. By adding a wide range of products and services, we are seeing strong growth in usage across the platforms," said Group Chief Finance Officer, Mr Roy Chimanikire. The revenue from the new products continues to grow while the initial investment costs decline, Mr Chimanikire added. Econet's banking subsidiary, Steward Bank, was now turning the corner as it has managed to sharply narrow its losses in the reporting period. The bank has been pivotal in Econet's strategy to diversify its sources of income. In the half year to August, Econet recorded a 4,2 percent rise in revenue to $392,3 million. The Earnings Before Interest, Taxation, Depreciation and Amortisation was down 8,3 percent at $155 million while margin declined to 40 percent from 45 percent in the previous year. Investment in network expansion fell by 6,9 percent to $79,5 million in the half year, compared to $85,4 million in the same period last year. However, subscribers grew by 5,8 percent to 9 026 332 during the half year period under review. Econet said its success has contributed about $1 billion to the fiscus, since dollarisation, in the form of various statutory payments such as corporate taxes, levies and licence fees. Copyright The Herald. Distributed by AllAfrica Global Media (allAfrica.com). |